Wellington’s trains: replace or refurbish?

Greater Wellington Regional Council (GWRC)
and the NZ Transport Agency announced today they intend to
replace rather than refurbish the existing Ganz Mavag trains
to complete the region’s peak train
requirements.

“When all 48 2-car new Matangi trains (or
96 cars) are in service later this year, at least a further
26 trains will still be needed for peak hour services,”
GWRC Chair, Fran Wilde, said today. “In the immediate
future the older Ganz Mavag trains are being used, but the
ageing and increasingly unreliable fleet needs to be
refurbished or replaced to ensure reliable services are
provided as demand continues to increase.”

Last year,
based on a comprehensive cost/benefit analysis of
refurbishment versus replacement, GWRC decided in principle
to refurbish the Ganz fleet subject to funding and final
comparison costs. The NZ Transport Agency agreed to fund at
least 50% of this refurbishment project.

“However, we
have recently received a competitive offer from Hyundai
Rotem, supplier of the Matangi, for up to 35 additional new
trains (or 70 cars). This offer is less than half the cost
estimated in 2011 and with more robust information on the
maintenance cost of the Matangi and Ganz fleets, buying more
Matangi units looks considerably more favourable than it did
last year.

“Importantly our reviews and independent
analysis show that buying more Matangi trains would have
about the same impact on regional fares and rates as
refurbishing the Ganz Mavag fleet because debt repayment
would be spread over a longer period.

“The key issue is
that if we refurbish the Ganz trains we still would have to
purchase replacements for them at the end of their life in
fifteen years’ time at whatever the price is in 2027,”
Fran Wilde said.

“Buying more Matangi trains offers a
rare opportunity to completely renew an entire fleet in one
extended procurement process.

“The Council will be
considering this at its September meeting and if approved we
would then begin negotiations. The financial evaluations and
economic modelling we have done as part of our due diligence
so far show that it is a ‘no-brainer’ to pursue this
option.

“We expect that during the 35 year life of the
new trains there would be a $228m saving over the cost of
refurbishing the Ganz fleet and replacing them in 15
years.”

Jenny Chetwynd, NZ Transport Agency’s Regional
Director says the NZTA's contribution of at least 50% of
this investment in new trains reflects the strength of the
proposal.

“These new trains will be a great investment
that provides good long term value for money and will
significantly improve state highway congestion issues as
well as the reliability, capacity and quality of
Wellington's public transport services. This should help to
encourage future passenger growth and help economic
productivity throughout the region. This is a significant
and worthwhile financial commitment which delivers on the
NZTA's investment priorities and the regional transport
strategy.”

Cr Peter Glensor, Chair of the Regional
Council’s Economic Wellbeing Committee, which oversees the
council’s public transport activities, said that the
replacement option offers two benefits: facilities on the
trains and reliability.

“An all-Matangi fleet would mean
that all of Wellington’s metropolitan trains would be
modern, efficient, fully accessible, air-conditioned and
reliable. We anticipate that more people would use the new
trains which would help reduce peak congestion and
transport-related pollution. Thus apart from the competitive
price on the table – half of last year’s market estimate
- an important issue is the performance and high quality
passenger experience of the Matangi fleet, and the improving
levels of punctuality,” Cr Glensor said.

“We are also
pleased with the very positive feedback we are receiving
from drivers and on-board crew as they become more familiar
with the new Matangi trains.

“Having a single fleet also
makes good economic sense: driver training would be simpler
and more consistent; no heavy maintenance would be needed in
the short term; warranties would be extended; spare parts
and inventory holdings would be reduced; and we would not
need to undertake further major rolling stock procurement
for at least 30 years,” Cr Glensor said.

Crs Wilde and
Glensor said that from the beginning they had explored the
issue of the impact of this decision on Hutt
Workshops.

“However, we have been informed by KiwiRail
that the workshops have enough current and planned work for
the existing workforce and are not reliant on the Ganz Mavag
refurbishment work. All regular maintenance on the Matangi
trains will also continue to be done locally.”

Ms Wilde
says that if negotiations proceed, delivery of the first
unit could be around the middle of 2014, with the entire
fleet in service by mid 2016.

GWRC is seeking public
comment on the proposal to replace the Ganz Mavag fleet. To
tell the GWRC what you think go to: www.gw.govt.nz/metro-fleet-proposal You
need to give your feedback by Friday 14 September
2012.

Metro Fleet Expansion proposal – Q &
As

How will the two options, refurbishing or
replacing, affect my rates?Refurbishing or replacing
the Ganz Mavag fleet would have a similar effect on your
rates. The purchase of the new trains involves a bigger
capital investment than refurbishment. This is balanced out
by a longer period for repaying the debt.

Why are you
consulting on this?Greater Wellington is legally
required to consult publicly on all significant ventures
such as this. We would normally consult on major activities
and expenditure through either the annual plan or the long
term plan process. We consulted on both of these plans
earlier this year. At that stage, the decision had been made
in principle to refurbish the Ganz fleet. But circumstances
have now changed considerably, so we need to carry out this
special consultation process.

We’ve just got new
trains, why do we need more?The 48 new units are
more than sufficient capacity for off peak services but
about 22 more units are still required for peak hour
services. The initial order for the new trains was made with
the knowledge that we would need to refurbish or replace the
Ganz Mavag fleet in the near future.

How much will they
cost?Negotiations on the specific cost would take
place after the Council makes the decision at its meeting on
26 September 2012. Because of the commercial sensitivity of
these negotiations we cannot release any details of the
costs at this stage.

If you replace the Ganz Mavag
fleet, what will happen to the refurbished
prototype?We’ll keep the prototype as part of a
contingency fleet for the Wellington metro rail
service.

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